IncomeDividends DeclaredCommon Stock
On December 31, 2016, Akron, Inc. purchased 5 Percent of Zip Company's common shares on the open market in exchange for $18,000. On December 31, 2017, Akron, Inc., acquires an additional 25 percent of Zip Company's outstanding common stock for $93,000.
During the next two years, the following information is available for Zip Company:
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 IncomeDividends DeclaredCommon Stock
Fair Value (12/31)2016Â Â $322,0002017$69,000$6,000372,000201882,00015,600484,000Â
At December 31, 2017, Zip reports a net book value of $283,000. Akron attributed any excess of its 30 percent share of Zip's fair over book value to its share of Zip's franchise agreements. The franchise agreements had a remaining life of 10 years at December 31, 2017.
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- Assume Akron applies the equity method to its Investment in Zip account:
- What amount of equity income should Akron report for 2018?
- On Akron's December 31, 2018, balance sheet, what amount is reported for the Investment in Zip account?
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- Assume Akron uses fair-value accounting for its Investment in Zip account:
- What amount of income from its investment in Zip should Akron report for 2018?
- On Akron's December 31, 2018, balance sheet, what amount is reported for the Investment in Zip account?
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Answers
Status NEW
Posted 11 Jul 2017 09:07 AM
My Price 9.00
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file 1499766425-Solutions file.docx preview (51 words )
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